Netflix's Biggest Advantage Isn't in the U.S.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The competition is coming for&nbsp;Netflix&nbsp;(NASDAQ: NFLX).” data-reactid=”11″>The competition is coming for Netflix (NASDAQ: NFLX).

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="With the upcoming launches of&nbsp;Apple&nbsp;(NASDAQ: AAPL) TV+,&nbsp;Disney‘s&nbsp;(NYSE: DIS)&nbsp;Disney+, and&nbsp;AT&amp;T‘s streaming service, the field is going to get crowded — those entries join Hulu, Amazon, and others vying for cord-cutter dollars.” data-reactid=”12″>With the upcoming launches of Apple (NASDAQ: AAPL) TV+, Disney‘s (NYSE: DIS) Disney+, and AT&T‘s streaming service, the field is going to get crowded — those entries join Hulu, Amazon, and others vying for cord-cutter dollars.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Investors clearly fear the threat these services pose to Netflix, as the stock fell 4.5% following the launch of Disney+ last week. However, American investors seem to be overreacting to the incoming competition because they are overly focused on the U.S. market. Outside the U.S., Netflix faces comparatively less competition. It’s growing much faster, and its competitive advantages look even stronger.” data-reactid=”13″>Investors clearly fear the threat these services pose to Netflix, as the stock fell 4.5% following the launch of Disney+ last week. However, American investors seem to be overreacting to the incoming competition because they are overly focused on the U.S. market. Outside the U.S., Netflix faces comparatively less competition. It’s growing much faster, and its competitive advantages look even stronger.

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Image source: Netflix.

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="International is where it’s at” data-reactid=”26″>International is where it’s at

Netflix now has significantly more subscribers outside the U.S. then inside, and generates more revenue internationally as well. Meanwhile, the company is reaching maturity in the U.S. — the company just crossed 60 million subscribers in the U.S., entering the 60-90 million domestic subscriber range that it’s long seen as its potential domestic market. In other words, the company’s growth will largely come from abroad from here on out, as there are already signs that domestic growth is slowing. Netflix added 1.7 million new domestic subs in the first quarter, down from 2.3 million a year ago, and it sees that figure slipping in the second quarter as well. However, internationally the company added 7.9 million members in the first quarter, up from 6 million a year ago, and it sees a slight uptick coming in the second quarter as well.

Internationally, Netflix faces few of the competitors it does in the U.S. Hulu, for example, is only available in the U.S. Disney is not planning to launch Disney+ globally until 2021. Apple TV+ looks like it will only be available in a handful of countries outside the country, and HBO Now, the streaming app from the world’s most popular premium network, is only available in the U.S.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Even competitors like&nbsp;Amazon&nbsp;that have made streaming available globally simply don’t have the allocated budget to match Netflix in country-specific, local-language content, and local competitors don’t have the content library or the budget to match Netflix.” data-reactid=”29″>Even competitors like Amazon that have made streaming available globally simply don’t have the allocated budget to match Netflix in country-specific, local-language content, and local competitors don’t have the content library or the budget to match Netflix.

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="A smorgasbord of content” data-reactid=”30″>A smorgasbord of content

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Detractors love to complain about Netflix's bevy of mediocre content, making fun of shows like&nbsp;Fuller House. It’s easy to pan a remake of an 80s sitcom, but what the critics miss is that Netflix is trying to offer something for everyone. The streamer isn’t out to be HBO, which has a highly curated slate of awards-bait programming that’s targeted at a more sophisticated audience.” data-reactid=”31″>Detractors love to complain about Netflix’s bevy of mediocre content, making fun of shows like Fuller House. It’s easy to pan a remake of an 80s sitcom, but what the critics miss is that Netflix is trying to offer something for everyone. The streamer isn’t out to be HBO, which has a highly curated slate of awards-bait programming that’s targeted at a more sophisticated audience.

The company’s approach has struck gold abroad. Netflix has thrown billions at foreign-language content intended for local audiences, and in just a few years has built up a substantial library of international programming. For instance, the company already has about 20 seasons of original Spanish TV, as well as content in French, Hindi, Korean, Portuguese, Polish, and several other languages. Netflix has also been ramping up international content, with 20 premiers of foreign-language series in 2018 alone, and it’s on pace to top that this year. 

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